Less Binary (Thankfully!)

Summer is over. When this week’s newsletter goes out, it will be September 21st, the official end of the season. For many investors, this is likely a double whammy…not only is the beach weather gone but the market was fabulous for the whole of the summer season. Can it keep going?

Around here, well, let’s just say it’s a mixed blessing. The weather certainly outperformed many of my stocks. Am I done with binary events? They haven’t been very good to me with aTyr Pharma (ATYR) being the third strike in this at-bat. Similar to INmune Bio (INMB), the placebo group’s performance doomed what looks like a promising drug. In the case of INmune, you have a subgroup and a path forward. I think aTyr is going to have a much more difficult path forward from here.

Which leads me to discussing Lineage Cell Therapeutics (LCTX), a stock in which I’ve built a decent position as it hits new 52-week highs. I got the question, “what makes this one different?” A lot.

First off, Lineage doesn’t have a binary date on the horizon. The data has been excellent and there is no “reveal” coming in the near future. In a nutshell, one doesn’t need to lose sleep over the trial failing.

Secondly, they are not in front of the FDA. In my experience the FDA, in their own capricious way, can derail programs that look incredibly beneficial to patients; picture enVVeno. Lineage does not have any applications in with the FDA and won’t for a while. Safe on that count.

The biggest difference with Lineage, however, is that they have partnered the OpRegen program off to a much larger partner. Roche-Genentech is running the program. The deep pockets of major pharma means that the clinical trial can take as long as needed with no corners cut (INmune changing enrollment come to mind?). OpRegen will stay in the clinic until it is fully ready to be taken out to the FDA. It will never be half-baked.

The downside, from an investor standpoint, of having a major pharma partner is the lack of urgency to a program combined with a lack of clarity to investors. Roche feels no need to update anyone on OpRegen and can keep it under wraps until it is FDA ready. Thus, shares of LCTX have languished as lack of visible progress frustrates the market.

Eventually times change. Roche has been increasing their financial commitment to the program, as evidenced by more trial sites opening. They are obviously liking what they are seeing. But, when will you and I know what is going on? The answer, which is why the stock is moving, is, “very soon.”

On Monday, Roche has their annual R&D day. It is quite possible we get an update on OpRegen then. Quite possible, but not a guarantee. However, in October, Roche has an Ophthalmology Day. If we hear nothing on Monday, it’s certain we’ll know something in less than a month when that day comes.

Summer is over, binary events are over and a clinical update on a winning program is coming. That’s what makes Lineage different in my mind. And, why I’m content to own shares here and now.

The best performing stock in my universe year-to-date is Ondas Holdings (ONDS). It has also raised the most money by far. Multiple financings at increasingly higher stock prices. The bank vault is open and the company is taking advantage of it.

When you’re a young, cash-burning company, access to capital is possibly the most gating factor in limiting your growth. With rates coming down, capital for micro-caps is looser but it’s still not easy to obtain. For those who can, however, the future is suddenly much brighter.

This week’s example is Aeluma (ALMU), which happens to be the second best performing stock in my universe YTD. And, after this week, another company with multiple financings under their belt in 2025.

On Wednesday, Aeluma closed at $17.55, only to price a financing at $13 on Thursday morning. One might think the stock would suffer and it did; temporarily. Come Friday, ALMU closed at $19.49. Turns out the financing was a positive for ALMU.

We posted a few notes in ALMU this week. Richard Prati, authored a piece on the company and then a followup on the financing. Finally, I wrote this piece discussing going forward. Lots to read but do it quickly as things seem to be moving fast there.

My Equinox Gold (EQX) has done quite well in the few weeks since I recommended this as a good play on gold. Gold continues to trade higher and EQX is in the process of re-rating as a bigger producer. I think it can double without needing a move in the underlying commodities…that would just be icing on the cake.

My other mining play, Lion One Metals (LOMLF) has not fared nearly as well due to a financing taking place, announced a little over a week ago. This round of capital was up-sized due to strong demand and is meant to close next week. I think LOMLF shares should respond well once the transaction closes and consider the recent pullback a nice buying opportunity.